Viewing Expert

James Hodgins , Chief Investment Officer

Curvature Hedge Strategies

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Markets. When volatility enters the market place for equities, it means you have increased dispersion. Not all stocks are correlated in one direction or the other. With market neutral investing you are on the right side of the market. Until the last month it was pretty much a straight ride up except for the Brexit dip. November 8th is a wild card and the Fed meeting in December is an even larger wild card. Canadian foreign ownership limits on housing will definitely have an impact. A housing slump in Canada could come from an increase in rates and a recession on the demand side. Frankly we need a pullback on the housing market.

Banks. The banking system here is more regulated than in the US. We have the big five. The risk is that consumer debt levels are at ratios where the US was in ‘05/’06. There is more risk over the Canadian banks than the US ones.

His favourite in the space. They are being permitted to build the largest grow op in the world. You are going to see some significant growth. There are lots of catalysts in the space. These guys have the best growth potential. They purchased a clinic in Ontario and they intend to be vertically integrated. They are the first one to do that strategy.

They made a large acquisition that he thinks will be accretive in the long term. It makes their earnings more stable. As stability of earnings increases, their ability increase dividends on a reliable basis also increases.

He had been short before these takeover rumours -- long positions before that. They have taken on a lot of debt. If growth comes through, then they will have the ability to pay down debt and the stock will be a winner, but he is not convinced there will be growth. It is a good brand, but online poker is flat to down.

The dividend yield is 3%, but they pay special dividends each year. Last year it made the yield a total of over 6% yield. They have been growing through their wine business in Canada and just launched Wiser’s in the US. He thinks their parent may take them out.

It is a call option on whether the debt holders will start declaring bankruptcy. The strategy had a lot of merit. They made a mistake by taking more debt for their UK acquisition when the financing was not fully lined up for it. Brexit caused the company to decline, but the debt was in US$. It is crushing the company.

In the process of being taken over. He had been short when it was announced. The ATM business is shrinking in Canada and around the world. It is an arbitrage situation at this point. He would not recommend buying more here. It is not a great business and there are not good chances of another bid here.

A mortgage corp. They invest in mortgages, both commercial and residential. It is a very well run company that has a nice dividend. There is a potential for them to be impacted by the new mortgage rules if the housing market slows down.

(Top Pick May 26/15, Down 64.64%)You can be right with the fundamentals but if it is in the wrong hands you could be wrong. Their growth in terms of number of units has been skyrocketing. The fundamentals are fantastic. It trades at 2 times cash flow. He would look at buying more here.

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